Formation of the business policy
- The mission of the business is its most obvious purpose — which may be, for example, to make soap.
- The objective of the business refers to the ends or activity at which a certain task is aimed.
- The business’s policy is a guide that stipulates rules, regulations and objectives, and may be used in the managers’ decision-making. It must be flexible and easily interpreted and understood by all employees.
- The business’s strategy refers to the plan of action that it is going to take, as well as the resources that it will be using, to achieve its mission and objectives. It is a guideline to managers, stipulating how they ought to use best the factors of production to the business’s advantage. Initially, it could help the managers decide on what type of business they want to form.
How to implement policies and strategies
- All policies and strategies must be discussed with all managerial personnel and staff.
- Managers must understand where and how they can implement their policies and strategies.
- A plan of action must be devised for each department.
- Policies and strategies must be reviewed regularly.
- Contingency plans must be devised in case the environment changes.
- Assessments of progress ought to be carried out regularly by top-level managers.
- A good environment is required within the business.
The development of policies and strategies
- The missions, objectives, strengths and weaknesses of each department must be analysed to determine their roles in achieving the business’s mission.
- The forecasting method develops a reliable picture of the business’s future environment.
- A planning unit must be created to ensure that all plans are consistent and that policies and strategies are aimed at achieving the same mission and objectives.
- Contingency plans must be developed, just in case.
All policies must be discussed with all managerial personnel and staff that is required in the execution of any departmental policy.
Where policies and strategies fit into the planning process
- They give mid- and lower-level managers a good idea of the future plans for each department.
- A framework is created whereby plans and decisions are made.
- Mid- and lower-level management may add their own plans to the business’s strategic ones.